Distribution #73- Explain the concept of distribution #74- Identify the channels of distribution

Concept of Distribution Movement of products from source of production to final user Products move through “channels” Includes selection and use of distribution activities: transportation, storage, outlets, and intermediaries

Distribution Activities Transportation- method(s) shipping/delivering products to destination SEA, AIR, RAIL, TRUCK, Storage – warehouses for storing Outlets- where products are sold Intermediaries – individual or firm that links producers to other intermediaries or the final consumer

Concept of Distribution When final user of product is for a business industrial user. When final user of product is used for personal use, it is called a consumer Industrial User Consumer

Channel Members Called intermediaries – or middlemen Reduce the number of contacts required to reach the final user of the product Major classifications: wholesaler or retailer

Wholesaler Person or firm that buys products in large quantities from various suppliers, warehouses them and re-sells to retailers.

Channels and Channel Members

Wholesaler Buys in large quantities from manufacturers Stores the goods Resells them to other businesses

Retailers Purchases from intermediary and re-sells Sells goods to final consumer

Direct and Indirect Channels Direct Distribution- occurs when the producer sells goods or services directly to the consumer with no intermediaries Indirect Distribution-involves one or more intermediaries

Concept of Distribution Distribution decisions all made with target market in mind. Consider the following: How is each distribution activity important to business? How does the target market of a product affect its transportation? How does the target market affect the use of channel intermediaries?

Class Assignment Work with a partner. Trace the distribution channel of selected product from producer to final consumer. Identify how each intermediary (or channel member) marks up the price to make a profit and how that impacts the price to the final consumer. Prepare in a PPT slide or presentation.